Copperstone Resources agrees with Sunstone to prepay additional purchase price for Viscaria acquisition (in key parts subject to EGM approval) - Seite 2

The Addendum for the prepayment of the APP has now been negotiated and entered into by Copperstone's Board of Directors, without Mr Malcolm Norris' participation (Mr Norris also being Sunstone's CEO). With reference to the general statement from the Swedish Securities Council (AMN 2019:25) concerning related-party transactions, the Addendum will also be submitted to the EGM now to be held in order to approve the above-mentioned rights issue. Out of the agreed cash prepayment of SEK 26 million, a down payment amounting of SEK 4.8 million will be paid before the EGM, which is to be retained if the APP prepayment is cancelled for whatever reason. The down payment will immediately result in an irreversible reduction of the potential cash owing of SEK 20 million to SEK 11.4 million. The irreversible down payment structure has been agreed for risk management purposes, the transaction value of which is below the threshold pursuant to the abovementioned AMN statement. The remainder of the prepayment amounting to SEK 21.2 million, assuming EGM approval, will become payable after completion of the rights issue.

The potential APP obligation (cash and shares) corresponds to a long-term liability according to IFRS in Copperstone's balance sheet as of 30 September 2020 of approximately SEK 46 million, which accounting assessment is inter alia taking the uncertainty of obtaining the environmental permit into account. The prepayment transaction is expected to result in a strengthening of the Company's equity of approximately SEK 20 million. As a result of the transaction, Sunstone will have no further claims on Copperstone as the Viscaria acquisition will be paid in full.

The Board of Directors is of the view that the now negotiated prepayment of the APP will be clearly beneficial to the Company and its shareholders, both in the short term and in the longer term. The APP prepayment in itself will improve Copperstone's solvency and financial risk picture significantly both upon the down payment and upon the remaining APP prepayment. The APP prepayment and the ensuing abolishment of a substantial potential dilution is deemed to facilitate a successful outcome of not only the now initiated rights issue, but in particular of any necessary future financing of the development of the Viscaria project. The main uncertainty for the APP becoming payable is the environmental permit, where a strong financial situation is deemed to improve Copperstone's favourable position further.